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Cadillac Tax Delayed for Two Years, Proposed Fiduciary Rule Untouched

Opponents of the Affordable Care Act excise tax on
higher-cost health plans got some welcome news in the massive year-end spending
package that funds the government through 2016, but the same could not be said
for those opposing the Labor Department’s fiduciary rule. Their goal of
blocking this rule will now need separate legislation to be realized.

The funding bill signed by President Obama on Dec. 18 (H.R.
2029) delays for two years the ACA’s excise or “Cadillac” tax, which would
place a 40 percent levy on plans exceeding $10,200 for individual coverage and $27,500
for family coverage. It was originally to take effect in 2018 but now is
postponed until 2020.

The combined $1.1 trillion omnibus appropriations and $680
billion tax extenders package passed the Senate on Dec. 18 by a 65-33
vote. The House easily passed the tax
extenders portion of the bill—which includes several employee-benefits- and
retirement-savings-related provisions—on Dec. 17.

The administration has opposed delaying the Cadillac tax, but
Obama said he would sign the bill because of other policy victories won by
Democrats in negotiations over the legislation—namely, the lack of Republican
policy riders, including one that would have blocked the Labor Department's
fiduciary rule that failed to make the final cut.

The spending bill also contains a moratorium on two taxes
used to pay for the ACA: the medical device tax and the health insurance tax.
The 2.3 percent excise tax on medical devices, which took effect in 2013, will
be frozen for two years. The health insurance tax, which took effect in 2014
and has been opposed by the insurance industry and small-business groups, will
be suspended for one year.

However, at the same time, House
lawmakers from both parties didn’t give up on blocking the fiduciary rule, and unveiled
legislation that includes mechanisms to end the fiduciary rule while aiming to
address the conflicts of interest in the provision of investment advice.

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